Sorry, social media, financial advisors are still tops when it comes to trusted advice.
According to Northwestern Mutual’s 2023 Planning & Progress Study released Monday, Americans rely on financial advisors as their most trusted source of financial advice, outpacing spouses, family members, business news, friends and yes, social media.
Despite spending outsized amounts of time on social networks, Gen Z members and millennials turn to flesh-and-blood financial advisors for definitive financial guidance. Millennials in the study ranked financial advisors as their top source for advice over all other options, while Gen Zers listed them second only to family members. (Come on, it’s mom and dad. That’s understandable!)
“FinTok and meme stocks inspired many young people to get excited about building wealth, but it’s clear that they are turning to advisors for advice they can trust,” Tim Gerend, chief distribution officer at Northwestern Mutual, said in a statement.
Harris Poll surveyed 2,740 U.S. adults 18 or older on behalf of Northwestern Mutual. The survey was conducted online between February 13 and March 2.
“It’s safe to say the majority of adults have come to the conclusion that we can use social media to connect with friends and pop culture but look to more trustworthy and vetted sources for important information like financial planning advice,” said Nina Lloyd, president of Opus Financial Advisors, part of Osaic.
Robert Cruz, vice president of regulatory and information governance at financial communications provider Smarsh, said he’s seen a variety of conflicting studies on this topic, including a recent survey by Finra and the CFA Institute that showed that 56% of members of Gen Z own at least some investments, led by crypto and individual stocks.
“Where do they go to learn about investing and financial topics? Of the nearly half that use social media, 60% listed YouTube as their first choice, followed by Instagram at 44% and TikTok at 37%,” he said.
In Cruz’s opinion, whether to seek financial advice through social media or a financial advisor isn’t really an either-or question and financial advisors focused on attracting Gen Z investors should leverage the platforms where that market is familiar and engaged.
“As in-person meetings become less prevalent, social media plays a crucial role in establishing trust and nurturing relationships,” he said. “Advisors can effectively showcase their personality, humanize their brand and build credibility by sharing personal stories and providing valuable educational content on social media.”
CONFIDENCE BOOSTERS
Whether or not they actively use social media, Americans overwhelmingly say that their financial planning needs improvement and that having a financial advisor boosts confidence, according to the Northwestern Mutual study. Still, the report shows that only 37% work directly with an advisor.
One factor driving this renewed focus on financial planning could be the current economic landscape. The survey revealed that nearly one in five people (18%) say recent economic uncertainty has led them to either begin working with a financial advisor or plan to work with one at a later date.
The study shows that people who work with an advisor have significantly higher levels of confidence across a range of areas, including being prepared for unplanned expenses (31 percentage points higher), being able to retire when the time comes (29 percentage points higher) and achieving long-term financial security (28 percentage points higher).
“When Americans ground their financial future in a custom-built plan and an expert advisor instead of in their own gut feelings, the confidence boost can be tremendous, and the improved financial outcomes can be just as significant,” said Northwestern Mutual’s Gerend. “Financial advisors can help people in so many ways they might not realize — managing debt, building and protecting wealth, estate planning and more.”